Foreign franchisors
have to make sure that they have done their
homework before entering the Russian market.
The
Russian Confederation offers a lot of potential
not least because the spending pattern of
consumers in Russia is rapidly starting to
resemble those of other European cities. This can
be seen every year by the increased popularity of
the Buybrand Franchise Exhibition in Moscow which
took place for the fifth time in September of this
year. However, income levels, cultural and
consumer patterns can vary significantly
throughout the country and thus a thorough market
research is indispensable.
In
addition, there are legal issues which, if not
properly dealt with at the outset, can lead to
considerable problems at a later stage. The most
significant which immediately springs to one's
mind is the liability of franchisors for
franchisee products and services set out in the
franchise provisions of the Russian Civil
Code.
Pursuant to the Code,
a franchisor is liable:
Minimising the risk
of being held liable for actions of the franchisee
and should therefore be on the top of every
franchisor's agenda. Ways to mitigate the
consequences of the statutory liability
include:
-
use of SPVs;
-
insurance
solutions; and
-
contractual
solutions.
For
further details on franchising in Russia, please
contact Babette
Märzheuser-Wood who is a Russian speaker or Mark
Abell.